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An International Social Finance Zone?

October 09, 2012
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This guest blog post is written by David Fushtey, LLB(JD), FABAF. David is a Fellow at the Centre for Dialogue with the Governance Project, and a Senior Fellow at the Centre for Corporate Governance and Risk Management. To read David's blog, visit the Governance Project website.

By David Fushtey, LLB(JD), FABAF

“I am worried about the Canada of 30 years from now.” A plain-talking California private-equity executive was thinking about innovation and productivity infrastructure [http://banffforum.ca]. And this was before he had seen the Canadian uptake on the “LOL Kitteh” web phenomenon, in moose antlers. But it put the timescale into investing in infrastructure, whether 19th century rail and telegraph or 20th century roads and telephone. Ideas, laws, technology, economy, community and environmental health meet again, now. Complexity is no longer a four letter word. From President Obama [Thomas Friedman, NYT 30Sep12] to the CEO of VanCity we are starting to make our lives easier by understanding how it all fits together. Tamara Vrooman [https://www.vancity.com/MyCommunity/] talks of how intellectual infrastructure is a subsidiary of community infrastructure, which is a subsidiary of economic infrastructure, and economic infrastructure is a subsidiary of environmental infrastructure, so we’d better have the information flows because we will surely see the accountability loops. Those who get it seem to focus on working together at being excellent, not being isolated as original or best.

The international social-finance zone is essentially an infrastructure idea. For the 21st century. Social finance is how we fuel projects with a predominantly public purpose, whether transportation infrastructure or crowd-sourced micro-finance. Layer in the global village and we are talking big words, big data, big complexity, big tech... to deal with specialized micro-ecologies and everyone big and small. Two examples of the convergence done well on my smile-list are http://www.perimeterinstitute.ca; and “neon” projects from words [http://www.neon-project.org/] to the environment [http://www.neoninc.org/]. It’s easy to talk of ideas and markets, of patient money and smart money; low-hanging fruit are conflict-based models of innovation as disruptive, discordant, and adversarial fighting through contests and quests for best. We see examples of sandboxes and caves as places for innovation, but these leave me wondering what helps us leave the cave? Too often I’ve heard of institutes and initiatives being touted as first, biggest, or best...and wondered what cave have they been in. We hear less about productive, deliberative dialogue, accountable for output, yet about the beauty of ideas and elegant solutions to make complex problems look simple. Yet that is what all trends indicate we need for long-term, sustained lifestyles and communities on this granite planet.

The zone is for social finance and sharing across a global village to be grounded in a great city for people to bump into each other, and to listen and laugh and scribble together. The infrastructure is both digital technology and good coffee. A zone is itself that innovative intersection of policies on community and financial efficacy. When everything matters.

Think about the commons of ideas, of the balance between public and private, of promoting both the exuberance of pursuing knowledge and passion for pursuing financial wealth. A social finance zone can help balance big ideas of public policy with getting things done on the ground by inspired individuals. Increasingly we are seeing a convergence of interests so the innovations need to be in the very structures which allow us to balance public, private, special and self-interests. We can do this.

Great cities, great people and great ideas are often not what you expect. The thoughtful questioning of how to make things better is a hallmark of social innovation, crystallized in a social finance zone which would weave in principles and practices of applied finance and law. Even the “great” examples of micro-finance and community interest corporations start with looking at first principles, then tweaking legal conditions around access to funds, decision-making and accountability, in financial security, scale, or success metrics, ignited by today’s technology to execute with excellence.

Private equity leaders investing in nanotechnology and quantum physics share a lot with people investing in micro-finance community projects: both respect people as the critical link. That private equity executive who expressed his concerns also noted the value of an educated workforce, of people who are not afraid to take risks particularly with some support in the bumpy road of learning how to do something better, in places where they want to live. The money to make their ideas real is there. A public infrastructure of social finance to bring the best of the world together for generations to come, needs work.